If Demand Is Perfectly Elastic

question 19

Multiple Choice

If demand is perfectly elastic,

• A)the smallest increase in price will cause quantity demanded to fall to zero.
• B)the smallest increase in price will cause demand to fall to zero.
• C)the smallest increase in price will cause quantity demanded to fall.
• D)the smallest increase in price will cause demand to fall.

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Definitions:

Break-Even Sales

The amount of revenue required to cover a company's total fixed and variable costs, without making a profit or loss.

Sales Revenue

The total amount of money generated from sales of goods or services, excluding any returns or allowances.

Mixed Costs

Costs with both variable and fixed characteristics, sometimes called semivariable or semifixed costs.

Variable Components

Variable components are costs or elements of a product, service, or project that change in proportion with the level of activity or volume.